Mother and baby products retailer Mothercare admitted today it was being outgunned in a price war with the supermarkets and would have to offer more discounts to get shoppers back through its doors.

Shares in Mothercare closed down 22p, or 4%, at 530p – although they had fallen as much as 7% earlier in the day – after it disappointed analysts with weaker-than-expected first quarter sales.

The disappointment came despite the retailer announcing that it had bought "yummy mummy" maternity brand Blooming Marvellous, whose founders, Judy Lever and Vivienne Pringle, started the brand in the 80s after they were unable to find fashionable maternity clothes on the high street during their own pregnancies. Mothercare chief executive Ben Gordon said Blooming Marvellous was an "excellent strategic fit" for Mothercare and "strengthens further our position as the leading specialist retailer for parents and parents-to-be".

Mothercare's UK like-for-like sales were down 4.1% in 15 weeks to 10 July. The UK business generates 75% of group turnover and Gordon told shareholders at its annual meeting that the trading environment "remained challenging". The international arm fared better, led by growth in eastern Europe, the Middle East and Asia, with sales ahead 20%.

Mothercare's biggest rivals include Tesco and Asda, and analysts said it was also likely to be suffering as a result of the pick-up in sales at Marks & Spencer's childrenswear business. Gordon said UK profit margins would suffer this year as Mothercare battled the tough consumer outlook: "We continue to plan cautiously for the remainder of this year."

In the wake of the figures, analysts are expected to downgrade their profit forecasts, with Singer's Matthew McEachran predicting a cut of about 5% – some £2m.

Mothercare has made a series of acquisitions in recent years including the purchase of the baby toys chain Early Learning Centre for £85m. Its newest charge, Blooming Marvellous, has a chequered history: it was bought from its founders by Icelandic investment vehicle Arev for an estimated £5m in 2007 but hit the buffers during the recession. It was bought out of administration by a consortium of entrepreneurs but Mothercare declined to say how much it had paid for the name.

Verdict analyst Maureen Hinton said that Blooming Marvellous had targeted a lucrative niche in the maternity wear market but had struggled to generate the turnover required to sustain it as a standalone enterprise: "Though there is a baby boom and older mothers are willing to spend more on their much wanted children … mothers-to-be do not buy lots of garments during this period so volumes are not high."